As housing, job markets improve, homeowners spend on remodeling

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Contractor Padraig O’Beirne (right) did renovations on a home in Lunenburg.

By Jay Fitzgerald
Globe Correspondent
March 10, 2013

Afew years ago, Stephen Feldman and his wife came close to undertaking a major renovation of their growing family’s three-bedroom home in Medfield. But still recovering from the hit their savings took in the 2008 stock market plunge, the Feldmans decided to put off their plans.

“We wanted to pull the trigger on the project, but financially we weren’t ready,” said Feldman, who owns a commercial printing company in Needham.

They’re ready now. Feeling more confident about their finances and the economy, the Feldmans have brushed off their plans to remodel the kitchen, add 1,000 square feet to their home, and make other changes. They’re seeking bids for their long-postponed project, which they expect to get underway this spring.

Area contractors, architects, interior designers, and others tied to the home construction industry are getting a lot of inquiries these days from people like the Feldmans as an improving economy and housing market lift the confidence of homeowners. Just a few years ago, contractors said, the few homeowners undertaking improvements limited work to small, maintenance-oriented projects that couldn’t be put off, such as fixing roofs, replacing drafty windows, or installing new heating systems.

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But today, not only are more people fixing up homes, they are launching ambitious projects, tearing down walls, expanding living spaces, and remodeling kitchens and bathrooms. “My phone has been ringing off the hook,” said Gary Gallagher, owner of Gallagher Home Builders Inc.in Concord. “I’ve gotten more phone calls in the past month than I did in the past year.”

The rebound in remodeling is another indication that confidence is growing and the economic recovery is gaining traction, analysts said. Last week, the Dow Jones industrial average surged to record highs while the Labor Department reported that US employers added 236,000 jobs in February and the unemployment rate declined to its lowest level in more than four years.

Spending on home improvement began to recover last year, when it jumped about 10 percent to some $126 billion nationally, according to the Joint Center for Housing Studies at Harvard University. The center projects that spending on home remodeling could surge by as much as 20 percent this year.

In Boston, permits for residential remodeling projects rose last year by 20 percent to about 6,300 permits, the most since of 2004, when housing was still booming, according to BuildFax, a home data tracking unit of Builderadius Inc. of North Carolina.

“There’s a sense of momentum,” said Stephen Melman, director of economic services at the National Association of Home Builders. “There’s still a lot of caution out there, but we’re definitely seeing more activity.”

Padraig O’Beirne, owner of Sudbury Home Improvement LLC, doesn’t need data to tell him that the home remodeling sector is recovering — at least for his firm. O’Beirne, who has hired five employees over the past year, has remodeling projects under way in Boxborough, Lunenburg, Marlborough, and Newton. He has two other projects in the pipeline in Sudbury.

“We were busy right through December and January, which are normally our slow months,” said O’Beirne. “After the November election, we started getting lots of calls. People finally seemed to realize, ‘Well, OK, we now know what we have for the next four years. Let’s get it done.’ ”

Underpinning this rebound are improving job and housing markets. Employers added more than 2 million jobs nationally last year and about 50,000 in Massachusetts, according to the Labor Department. Home sales in Massachusetts last year hit their highest level since 2006, according to Warren Group, a Boston real estate tracking firm.

As a result, homeowners are growing more confident about taking on big home-improvement projects. They aren’t investing at the frenzied pace seen during the last housing boom, but they’re more willing to spend money on their homes now that they know values are stabilizing, industry officials said.

Among those feeling more confident is Neil Murphy.

‘There’s still a lot of caution out there, but we’re definitely seeing more activity.’

A vice president of finance at a local software company, Murphy was considering renovating his four-bedroom brick Tudor home in Arlington, but couldn’t pull the trigger as he worried about uncertain job and housing markets in the years that followed the Wall Street fiasco of 2008. He decided to put any major renovations until things settled down.

Last year, sensing a better economy and a more stable housing market, he hired Conneely Contracting Inc. of Arlington to remodel his kitchen and bathrooms, add a 360-foot addition, and re-side the exterior, among other things.

“It just made sense,” he said. “To us, it was the perfect time to do it.”

Marty Conneely, owner and president of Conneely Contracting, said he’s getting a lot more clients like Murphy — enough that he recently hired four additional employees. “There’s definitely more activity out there,” said Conneely.

Mark Zandi, chief economist at Moody’s Analytics, said the increase in remodeling work will help give a much-needed boost to the economy and construction industry, which was the hardest hit sector in the last recession. While remodeling has nowhere near the economic impact as new home construction, Zandi said, there’s “a lot of pent-up demand” by homeowners to undertake renovations beyond fixing roofs and replacing windows.

“There’s still a lot of room to run here,” he said of continued growth within the home improvement sector.

In Massachusetts, remodeling activity could be helping to stabilize construction employment, which has fallen about 30 percent from its prerecession peak, said Alan Clayton-Matthews, an economist at Northeastern University. The Massachusetts construction industry experienced a small bounce in employment from the federal government’s stimulus spending a few years ago, but those dollars have since dried up. The surge in remodeling may be creating new jobs to offset those lost after the demise of stimulus spending, he said.

Cheryl Senter for The Boston Globe

The Joint Center for Housing Studies at Harvard University projects that spending on remodeling projects, like the one Padraig O’Beirne worked on, could surge by as much as 20 percent this year.

It’s not just construction firms benefiting from the uptick in the remodeling and renovation business. The world’s largest home improvement company, Home Depot Inc., recently reported that sales at stores open at least a year jumped by about 7 percent in the fourth quarter of 2012.

Its competitor, Lowe’s Cos., reported a 2 percent increase in sales during the same period, and industry officials expect that growth to accelerate as the housing market improves.

Jeff Swanson, owner of Renovation Planning LLC in Boston’s South End, said his residential design and construction-oversight firm experienced a more than 50 percent increase in business from remodeling last year — and he expects a further 20 percent increase this year.

“People were holding back on projects, and you can only hold back for so long,” he said.

Since late last fall, Paul Apkarian, owner of Paul Apkarian Architects Inc. in Westborough, said he has landed about 20 new design contracts for home renovations, double the assignments the year before.

Buoyed by the increase, Apkarian said he recently began advertising to hire a new architect drafter in order to meet growing demand for design work. “There’s really been a surprising amount of work coming in,” said Apkarian. “It’s almost hard keeping up.”

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